Owners and directors of Florida corporations should be aware of amendments to the Florida Business Corporation Act (codified at Florida Statutes, Chapter 607). The revisions to the law go into effect on January 01, 2020–though certain pending lawsuits and rights prior to January 01, 2020 will continue to be governed by the current law.
The amendments represent a comprehensive modification to the Florida Business Corporation Act. The amendments include, among other issues, the following changes:
- Allow for reservation of a desired corporate name for 120 days;
- Address rights and procedures related to shareholder direct actions (a personal claim by a shareholder against the corporation) and shareholder derivative actions (a claim brought by a shareholder on behalf of the corporation where the corporation refuses to assert its right);
- Modify the provisions governing anti-takeover, mergers, and share exchanges, and create a new “two-step merger” provision that (in certain situations) may be accomplished without the approval of shareholders;
- Broaden the appraisal rights of minority shareholders (i.e., shareholders owning less than a majority, or without control, of the corporation), including the clarification that determining the fair value of a minority interest should not apply a discount for the share’s lack of marketability or minority status; and
- Increase the discretion of a Court with respect to judicial dissolutions and to utilize alternatives in lieu of dissolving the entity.
Clark Partington remains ready to assist clients with understanding how the amendments to the Florida Business Corporation Act may impact their rights and obligations as a shareholder, officer, or director of a corporation. In many situations, the new law permits a client to trump or override the default provision under the Florida Business Corporation Act through contrary language in the corporation’s governing documents (Articles of Incorporation, Bylaws, or Shareholders Agreement).